Question

Sullivan's wife, Susan, died four years ago. Sullivan is 40 years old, has not remarried, and he maintains a home for his dependent child, Sammy, who is 10 years old. In 2019, Sullivan received $70,000 of salary from his employer and $3,000 of qualified business income from a business investment, and he paid $10,000 of itemized deductions.

Compute the following for Sullivan's 2019 tax return:

Gross income

Adjusted gross income

Taxable income

Tax liability after credits

Answer 1

For 2019, Gross Income of Sullivan is $70,000+$10,000=$80,000

Adjustable Gross income would be $80,000-3000=$77,000

Taxable Income=$77000-$6350(standard deduction)=$70,650

And, Tax Liability after credits is equal to $1940+12% of 51250($70650-$19400)=$8,090.